Celularity Inc [CELU] Filings

Celularity Inc [CELU] Filings

Celularity Inc [CELUW] Filings

10-Q 1 celu-20220930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-38914

Celularity Inc.

(Exact name of registrant as specified in its charter)


Delaware	83-1702591
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
170 Park Ave, Florham Park, NJ (Address of principal executive offices)	07932 (Zip Code)

(908) 768-2170

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	CELU	The Nasdaq Stock Market LLC
Warrants, each exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share	CELUW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 4, 2022, the registrant had 145,013,313 shares of Class A common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	2
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44
Signatures		45

On July 16, 2021, we consummated the previously announced merger pursuant to that certain Merger Agreement and Plan of Reorganization, dated January 8, 2021, or the Merger Agreement, by and among us, our wholly-owned merger subs and Celularity LLC (formerly known as Celularity Inc.), or Legacy Celularity.

Pursuant to the terms of the Merger Agreement, we effected the business combination through the (a) merger of our wholly-owned merger sub with and into Legacy Celularity with Legacy Celularity surviving as our wholly-owned subsidiary and (b) immediately following the first merger and as part of the same overall transaction, the merger of the Legacy Celularity, as surviving corporation of the first merger, with and into a second wholly-owned merger sub, with such second wholly-owned merger sub as the surviving entity of the second merger, which ultimately resulted in Legacy Celularity becoming our wholly-owned direct subsidiary. We refer to these mergers as the “Mergers” and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”. On the Closing Date, we changed our name from GX Acquisition Corp. to Celularity Inc.

Unless the context indicates otherwise, references in this quarterly report to the “Company,” “Celularity,” “we,” “us,” “our” and similar terms refer to Celularity Inc. (f/k/a GX Acquisition Corp.) and its consolidated subsidiaries (including Legacy Celularity). References to “GX” refer to the predecessor company prior to the consummation of the Business Combination.

The Celularity logo, Celularity IMPACT, Biovance, Interfyl, Lifebank, CentaFlex and other trademarks or service marks of Celularity Inc. appearing in this quarterly report are the property of Celularity Inc. This quarterly report on Form 10-Q also contains registered marks, trademarks and trade names of other companies. All other trademarks, registered marks and trade names appearing herein are the property of their respective holders

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained within this quarterly report on Form 10-Q, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These statements relate to our future events, including our anticipated operations, research, development and commercialization activities, clinical trials, operating results and financial condition and may include, but are not limited to, statements about:

•

the success, cost, timing and potential indications of our cellular therapy candidate development activities and clinical trials;

•

the timing of the initiation, enrollment and completion of planned clinical trials in the United States and foreign countries;

•

our ability to obtain and maintain regulatory approval of our therapeutic candidates in any of the indications for which we plan to develop them, and any related restrictions, limitations, and/or warnings in the label of any approved therapeutic;

•

our ability to obtain funding for our operations, including funding necessary to complete the clinical trials of any of our therapeutic candidates;

•

our ability to attract and retain collaborators with development, regulatory and commercialization expertise;

•

the size of the markets for our therapeutic candidates, and our ability to serve those markets;

•

our ability to successfully commercialize our therapeutic candidates;

•

our ability to develop and maintain sales and marketing capabilities, whether alone or with potential future collaborators;

•

our expenses, future revenues, capital requirements and needs for additional financing;

•

our use of cash and other resources; and

•

our expectations regarding our ability to obtain and maintain intellectual property protection for our therapeutic candidates, degenerative disease products, and our ability to operate our business without infringing on the intellectual property rights of others.

These forward-looking statements are based on information available as of the date of this quarterly report, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties that could cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Some factors that could cause actual results to differ include:

•

We have incurred net losses in every period since our inception, have no cellular therapeutic candidates approved for commercial sale and we anticipate that we will incur substantial net losses in the future.

•

We believe that our cash and cash equivalents as of September 30, 2022, will fund our current operations into the first quarter of 2023. We do not have any guaranteed financing and will need substantial additional financing to develop our therapeutics and implement our operating plans. If we fail to obtain additional financing, we may be unable to complete the development and commercialization of our therapeutic candidates and could be required to adjust our development plan to reduce expenses.

•

We could be required to make cash payments under our pre-paid advance agreement with Yorkville and may not have sufficient cash available when due, which could impact our liquidity and require us to modify our operations to meet any prepayment obligations.

•

Our placental-derived cellular therapy candidates represent a novel approach to cancer, infectious and degenerative disease treatments that creates significant challenges.

•

Our historical operating results indicate substantial doubt exists related to our ability to continue as a going concern.

•

Our business could be materially adversely affected by the effects of health pandemics or epidemics, including the ongoing COVID-19 pandemic and future outbreaks of the disease, in regions where we or third parties on which we rely have concentrations of clinical trial sites or other business operations.

•

Our commercial business may be impacted if regulatory authorities determine that certain of our products that are, or are derived from, human cells or tissues do not qualify for reimbursement.

•

Our business is highly dependent on the success of our lead therapeutic candidates. If we are unable to obtain regulatory approval for our lead candidates and effectively commercialize our lead therapeutic candidates for the treatment of patients in approved indications, our business would be significantly harmed.

•

We rely on CAR-T viral vectors from Sorrento Therapeutics, Inc., or Sorrento, for our CYCART-19 therapeutic candidate and termination of this license, or any future licenses, could result in the loss of significant rights, which would harm our business.

•

We rely and will continue to rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval of, or commercialize, our therapeutic candidates.

•

The U.S. Food and Drug Administration, or FDA, regulatory approval process is lengthy and time-consuming, and we may experience significant delays in the clinical development and regulatory of our therapeutic candidates.

•

We may not be able to file Investigational New Drug, or IND, applications to commence additional clinical trials on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed without additional information (such as with our recent IND submission for CYCART-19) or at all, and if so, we may encounter substantial delays in our clinical trials or may not be able to conduct our trials on the timelines we expect.

•

We operate our own manufacturing and storage facility, which requires significant resources; manufacturing or other failures could adversely affect our clinical trials and the commercial viability of our therapeutic candidates and our biobanking and degenerative diseases businesses.

•

We rely on donors of healthy human full-term post-partum placentas to manufacture our therapeutic candidates, and if we do not obtain an adequate supply of such placentas from qualified donors, development of our placental-derived allogeneic cells may be adversely impacted.

•

Our clinical trials may fail to demonstrate the safety and/or efficacy of any of our therapeutic candidates, which would prevent or delay regulatory approval and commercialization.

•

If our effort to protect the proprietary nature of the intellectual property related to our technologies are inadequate, we may not be able to compete effectively in our market.

•

We are, and in the future may be, party to agreements with third parties. Disputes may arise with such third parties regarding the terms of such agreements, including terms governing payment obligations, contractual interpretation, or related intellectual property ownership or use rights, which could materially adversely impact us, including by requiring the payment of additional amounts, or requiring us to invest time and money in litigation or arbitration.

•

Our therapeutic candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences.

•

We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.

•

Our relationship with customers, physicians, and third-party payors are subject to numerous laws and regulations. If we or our employees, independent contractors, consultants, commercial partners and vendors violate these laws, we could face substantial penalties.

•

We will continue to incur significant costs as a result of operating as a public company, and our management will be required to devote substantial time to various compliance initiatives.

For a further discussion of these and other factors that could cause our future results, performance or transactions to differ significantly from those expressed in any forward-looking statement, please see the section titled “Risk Factors” in our annual report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2022, as amended July 15, 2022, or the 2021 Form 10-K.

iii

Given these risks, you should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements). While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. Except to the extent required by applicable law, we are under no obligation (and expressly disclaim any such obligation) to update or revise their forward-looking statements whether as a result of new information, future events, or otherwise.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Celularity Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)


	September 30, 2022			December 31, 2021

Assets
Current assets:
Cash and cash equivalents	$	42,649		$	37,240
Accounts receivable, net of allowance of $1,264 and $283 as of September 30, 2022 and December 31, 2021, respectively		4,452			2,745
Notes receivable		3,920			2,488
Inventory		5,239			9,549
Prepaid expenses and other current assets		6,837			7,078
Total current assets		63,097			59,100
Property and equipment, net		77,032			90,625
Goodwill		123,304			123,304
Intangible assets, net		121,547			123,187
Right-of-use assets - operating leases		13,042			-
Restricted cash		14,832			14,836
Inventory, net of current portion		23,861			2,721
Other long-term assets		401			355
Total assets	$	437,116		$	414,128
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity
Current liabilities:
Accounts payable	$	9,216		$	9,317
Accrued expenses and other current liabilities		18,507			11,661
Current portion of financing obligation		-			3,051
Short-term debt ($39,255 at fair value and $40,000 unpaid principal balance at September 30, 2022)		39,255			-
Deferred revenue		2,241			2,196
Total current liabilities		69,219			26,225
Deferred revenue, net of current portion		2,120			1,871
Acquisition-related contingent consideration		158,781			232,222
Noncurrent lease liabilities - operating		27,917			-
Financing obligations		-			28,085
Warrant liabilities		14,094			25,962
Deferred income tax liabilities		10			10
Other liabilities		740			335
Total liabilities		272,881			314,710
Commitments and Contingencies (Note 10)
Stockholders’ equity
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding at September 30, 2022 and December 31, 2021		-			-
Common Stock, $0.0001 par value, 730,000,000 shares authorized, 144,524,190 issued and outstanding as of September 30, 2022; 730,000,000 shares authorized, 124,307,884 issued and outstanding as of December 31, 2021		14			12
Additional paid-in capital		833,915			763,087
Accumulated other comprehensive income		236			-
Accumulated deficit		(669,930	)		(663,681	)
Total stockholders’ equity		164,235			99,418
Total liabilities, redeemable convertible preferred stock and stockholders’ equity	$	437,116		$	414,128

The accompanying notes are an integral part of these condensed consolidated financial statements.

Celularity Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

(in thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net revenues
Product sales and rentals	$	1,041		$	849		$	2,920		$	2,734
Services		1,405			1,343			4,061			4,204
License, royalty and other		1,689			8,430			6,865			9,541
Total revenues		4,135			10,622			13,846			16,479
Operating expenses
Cost of revenues (excluding amortization of acquired intangible assets)
Product sales and rentals		812			638			1,711			2,025
Services		899			923			3,112			2,218
Licenses, royalties and other		5,502			750			9,595			750
Research and development		20,351			23,765			67,373			63,666
Selling, general and administrative		14,907			21,644			46,941			58,133
Change in fair value of contingent consideration liability		(33,243	)		(48,549	)		(73,441	)		(17,845	)
Amortization of acquired intangible assets		553			553			1,640			1,640
Total operating expenses		9,781			(276	)		56,931			110,587
(Loss) income from operations		(5,646	)		10,898			(43,085	)		(94,108	)
Other income (expense):
Interest income		108			55			155			324
Interest expense		-			(843	)		-			(2,412	)
Change in fair value of warrant liabilities		9,333			39,937			31,613			2,258
Change in fair value of debt		(291	)		-			(291	)		-
Other income (expense), net		1,278			(109	)		1,366			(2,140	)
Total other income (expense)		10,428			39,040			32,843			(1,970	)
Income (loss) before income taxes		4,782			49,938			(10,242	)		(96,078	)
Income tax benefit		(17	)		-			-			-
Net income (loss)	$	4,799		$	49,938		$	(10,242	)	$	(96,078	)
Change in fair value of debt due to change in credit risk, net of tax		236			-			236			-
Other comprehensive income		236			-			236			-
Comprehensive income (loss)	$	5,035		$	49,938		$	(10,006	)	$	(96,078	)
Share information:
Net income (loss) per share - basic	$	0.03		$	0.47		$	(0.07	)	$	(2.00	)
Weighted average shares outstanding - basic		142,676,953			106,369,910			137,787,645			48,071,685
Net income (loss) per share - diluted	$	0.03		$	0.40		$	(0.07	)	$	(2.00	)
Weighted average shares outstanding - diluted		150,546,268			123,582,822			137,787,645			48,071,685

The accompanying notes are an integral part of these condensed consolidated financial statements.

Celularity Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited)

(in thousands, except share amounts)


	Series A Redeemable Convertible Preferred Stock				Series B Redeemable Convertible Preferred Stock				Series X Redeemable Convertible Preferred Stock				Common Stock					Treasury Stock				Additional Paid-in			Accumulated			Accumulated Other Comprehensive		Total Stockholders’ Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount		Shares		Amount		Capital			Deficit			Income		(Deficit)
Balances at December 31, 2021		-	$	-		-	$	-		-	$	-		124,307,884		$	12		-	$	-	$	763,087		$	(663,681	)	$	-	$	99,418
Cumulative effect adjustment ASU 2016-02		-		-		-		-		-		-		-			-		-		-		-			3,996			-		3,996
Reclassification of previously exercised stock options		-		-		-		-		-		-		131,253			-		-		-		441			-			-		441
Exercise of warrants		-		-		-		-		-		-		13,281,386			2		-		-		46,483			-			-		46,485
Exercise of stock options		-		-		-		-		-		-		10,255			-		-		-		21			-			-		21
Purchase and retirement of common shares		-		-		-		-		-		-		(3,058	)		-		-		-		(11	)		-			-		(11	)
Stock-based compensation expense		-		-		-		-		-		-		-			-		-		-		2,422			-			-		2,422
Net loss		-		-		-

Celularity Inc [CELU] Filings
Celularity Inc [CELUW] Filings
10-Q	[2022-11-10]
10-Q	[2022-08-09]
S-1	[2022-05-25]
10-Q	[2022-05-16]
S-1	[2022-04-29]
10-K	[2022-03-31]
10-Q	[2021-11-12]
10-Q	[2021-08-19]
S-1	[2021-08-06]
10-Q	[2021-05-24]
10-K	[2021-03-04]
10-Q	[2020-11-16]
10-Q	[2020-08-13]
10-Q	[2020-05-15]
10-K	[2020-03-24]
10-Q	[2019-11-13]
10-Q	[2019-08-07]
S-1	[2019-04-26]

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company